PSU stocks tumble up to 8% as Budget 2025 lowers FY25 capex to ₹10.18 lakh crore | Stock Market News
Union Budget 2025: State-owned stocks, including those in the railway and defence sectors, are trading with significant losses in today’s trade, February 1, due to the government’s decision in the Union Budget 2025-26 to reduce the revised capital expenditure (capex) estimate for FY25 to ₹10.18 lakh crore.
The cut is attributed to slower capital spending during the first half of the fiscal year. For FY26, Nirmala Sitharaman, in her budget for 2025-26, raised the capex target to ₹11.2 lakh crore, which is lower than expected. Industry insiders were expecting the government to raise the capex allocation to ₹11.5 lakh crore, up from ₹11.1 lakh crore a year ago.
Amid this backdrop, the BSE PSU index, a barometer of public sector enterprises’ performance, tumbled 4% in trade, reaching 3.65% to the 17,718 level, as PSU companies, typically key beneficiaries of government capex initiatives, were impacted.
Concurrently, PSU bank stocks have also tumbled in trade, as expectations arise that low capex will impact their corporate lending business. Additionally, banking stocks were further impacted as the Union Budget 2025 raised gross market borrowings by 5.7% to ₹14.8 lakh crore for FY26 to finance a fiscal deficit of 4.4%, up from the ₹14.1 lakh crore target set for FY25.
Sandeep Nayak, ED & CEO of Retail Broking Centrum Broking, said, “The continuation on the path of fiscal discipline with a fiscal deficit for FY26 pegged at 4.4% of GDP is a positive for the economy. Capital expenditure spending at marginally less than last year’s estimate is a mild negative. On the reforms front, a simplified tax code to be unveiled should bring more cheer to taxpayers.”
“Insurance FDI increased to 100%, which is a big positive. The budget has focused on increasing the disposable income of the middle class with an increase in the taxable income limit to ₹12 lacs from the existing Rs. 7 lacs. It is a ‘middle class sukino bhavantu’ budget, which should boost consumption. Revival of urban consumption will have a positive multiplier effect on the economy, helping mitigate the effect of the slowdown seen in the last couple of quarters,” added Nayak.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
